Under what circumstances can Checkersrallys require a franchisee to execute a lease for the Restaurant Location upon termination or expiration of the Franchise Agreement?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
16.05 Right to Lease Real Estate.
- (a) Upon termination of this Agreement (for any reason, no reason, or upon expiration without renewal), if you or any of your Owners or Affiliates directly or indirectly owns the building and/or land (the "Real Estate") on which the Franchised Restaurant is located, we may, and at our option (in our sole discretion) and in conjunction with our purchase of the Franchised Restaurant pursuant to Section 16.04 hereof, require you to execute and deliver to us or our designee a lease for the Restaurant Location pursuant to the terms of Section 16.05(b).
- (b) If we elect to require you to execute and deliver to us or our designee a lease for the Restaurant Location, we shall deliver written notice to you within ten (10) days after the effective date of termination or expiration of this Agreement of such election. Following such notice, you and we shall negotiate in good faith a lease for the Real Estate containing commercially reasonable terms with a term equal to a minimum of the remaining Term under this Agreement. If you and we have not agreed to a lease within thirty (30) days after your receipt of our election, we shall engage a Real Estate Appraiser to prepare a lease with commercially reasonable terms. The Real Estate Appraiser's determination will be binding, and you must
execute and deliver to us a lease for the Restaurant Location containing the commercially reasonable terms provided by the Real Estate Appraiser. All fees, compensation and cost and expense reimbursements of the Real Estate Appraiser shall be borne equally by the parties. Upon your execution of the lease for the Restaurant Location, you agree to vacate the Restaurant Location promptly and completely, rendering all necessary assistance to us to enable us to take prompt possession.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, Checkersrallys has the option to require a franchisee to execute a lease for the restaurant location under specific circumstances related to the ownership of the real estate. If the franchisee or any of their owners or affiliates directly or indirectly owns the building and/or land where the franchised restaurant is located, Checkersrallys may require the franchisee to execute a lease for the restaurant location upon termination or expiration of the Franchise Agreement. This is contingent upon Checkersrallys exercising its option to purchase the franchised restaurant.
If Checkersrallys elects to require the franchisee to execute a lease, they must provide written notice within ten days after the termination or expiration date of the Franchise Agreement. Following this notice, both parties are expected to negotiate in good faith to establish a lease with commercially reasonable terms. The lease term should be a minimum of the remaining term under the original Franchise Agreement.
In the event that the franchisee and Checkersrallys cannot agree on lease terms within thirty days of the franchisee receiving the election notice, a Real Estate Appraiser will be engaged to prepare a lease with commercially reasonable terms. The determination made by the Real Estate Appraiser will be binding, and the franchisee is obligated to execute and deliver a lease for the restaurant location based on those terms. The fees, compensation, and expenses of the Real Estate Appraiser will be shared equally between Checkersrallys and the franchisee. Upon executing the lease, the franchisee must promptly vacate the restaurant location and provide necessary assistance to allow Checkersrallys to take possession.